Executive Summary: Key Legal and Evidentiary Issues

Discovery obligations require broad document production in complex construction disputes involving substantial damages claims. Internal communications among contractors and subcontractors establish knowledge, timing, and contractual breaches relevant to liability. Board meeting minutes and corporate resolutions provide evidence of management awareness regarding project issues and risk exposure. Insurance proceeds documentation is essential to determine actual damages and mitigation efforts undertaken by parties. Proportionality principles must balance disclosure burdens against the existence of already-collected materials from identified custodians. Pleading allegations determine discovery scope, preventing requests for documents unrelated to expressly-raised matters in court filings.

Facts of the case

The City of Ottawa entered into a Design-Build-Operate-Finance (DBOF) contract with Rideau Transit Group General Partnership for a major transit project. Under the contract structure, RTG bore responsibility for design and implementation while the City retained oversight authority through design reviews, monthly reporting requirements, and committee participation. The contractual allocation placed RTG as the intermediary between the City and its subcontractors. Multiple disputes emerged during project execution concerning the fitness of ash wood materials supplied by the City, vehicle delivery delays spanning design, manufacture, and production phases, and disputed claims for disruption costs allegedly caused by contract variations including a contested weather directive (VD-139).

Alleged breaches and damages claims

The City alleges RTG breached contractual duties by accepting ash wood upon delivery without raising concerns and failing to conduct adequate due diligence inspections to identify material defects. RTG disputes this characterization, attributing ash wood issues to poor material quality supplied by the City. Regarding vehicle delivery delays, the City contends RTG caused delays through design inactions, procurement failures, and supply chain mismanagement, while RTG argues the City delayed the project by failing to timely approve design elements. RTG seeks additional compensation for disruption costs estimated at approximately $70 million relating to alleged contract variations. The City's claim seeks damages exceeding $130 million, while RTG's counterclaim seeks damages exceeding $200 million.

The discovery motion

Justice Perron addressed a procedural motion by the City to confirm the scope of RTG's documentary production obligations during the discovery phase. The parties negotiated an extensive discovery plan spanning approximately 86 pages with detailed appendices, establishing production from 32 City custodians and 23 RTG custodians along with defined keyword search parameters, based on the Sedona Principles. Despite extensive negotiations, approximately 115 document categories remained disputed, grouped into four schedules for judicial determination.

Category 1: Subcontractor Documents

The City sought production of internal communications within RTG and communications between RTG and its subcontractors, representing approximately 30% of production requests. These requests were narrowly tailored to allegations regarding design and construction issues and limited to the 23 already-agreed custodians. The City argued that due to the contract structure making RTG the sole intermediary, it lacked access to these internal discussions regarding ash wood inspection, quality assessments, and knowledge of defects. RTG opposed production claiming "internal chatter" was not relevant, would not assist in determining contractual compliance, and would be burdensome, potentially yielding hundreds of thousands of documents at substantial cost. The Court rejected RTG's fishing expedition characterization, finding the City had narrowed requests to specific pleading allegations. Justice Perron established that under Rule 30.02, documents relevant to any matter in issue must be produced, and "a document is relevant if it is logically connected to and tending to prove or disprove a matter in issue." The Court found RTG's relevance position impermissibly narrow and non-compliant with case law. In contractual disputes arising from construction projects, internal communications regarding alleged contract obligations and breaches cannot be categorized as irrelevant. Addressing proportionality, the Court rejected RTG's cost concerns as unsupported by objective data. RTG had already collected approximately 2 million documents from the 23 custodians, and the request only required running keyword searches in the existing database and reviewing documents for relevance—not requesting additional custodians. With over one month remaining before the December 19, 2025 deadline and review already underway, the Court found no basis to conclude additional requests would unduly delay the action. The Court emphasized that when significant damages are claimed, "the law should favor a generous interpretation of disclosure requirements and a broad scope of document production." RTG was ordered to produce the Subcontractor Documents in their entirety.

Category 2: Board Documents

The City sought approximately 38 requests for reports and updates to lenders, executive committees, management committees, and boards of directors, along with resolutions and meeting minutes. The City's position was that contemporaneous reporting to board and senior leadership constitutes evidence of what RTG knew and when, what was reported about potential liability, and that lender reporting was relevant given the DBOF contract structure. The City agreed to make requests reciprocal, producing equivalent City Council and committee documents. RTG opposed on grounds that senior management was not involved in day-to-day issues, alleged no failures in timely reporting, and contended documents would be privileged and commercially sensitive requiring extensive redactions. The Court found both parties' prior requests for such documents indicated mutual recognition of relevance. Justice Perron determined that reports and communications to the board are relevant to proving alleged breaches and to damages issues including mitigation and limitation period defences. The Court bifurcated the order: both parties must produce relevant meeting minutes and resolutions where specific disputed issues were discussed, which should be relatively easy to locate. The request for "reports and/or updates" was excluded from mandatory production initially, to be further canvassed at discovery examinations.

Category 3: Insurance Documentation

The City sought limited production showing how much was paid from insurance, from whom, and when for each head of damages claimed by RTG, with the City agreeing to produce equivalent Builders' Risk Insurance Policy documents. RTG contended requests were overbroad and unnecessary and better addressed at discovery. The Court agreed with the City that a discovery plan's purpose is to narrow issues prior to examinations and ensure productivity. Finding no legitimate reason to defer production, the Court ordered both parties to produce documents showing quantum received from insurance proceeds, payor of funds, and timing for each applicable head of damages.

Category 4: Miscellaneous items

RTG's due diligence documents on ash wood products during the proposal period were found not relevant because RTG's claim relates to fitness of the actual ash wood supplied, not general due diligence. RTG's disruption costs claim for VD-139 was restricted to documents supporting current costs claimed, with further exploration deferred to discovery. RTG's damages related to VN-100 and VE-DCE-280 were agreed to be produced. Regarding vehicle delivery delays, the Court rejected RTG's attempt to limit production only to documents supporting RTG's own theories of causation. The Court found RTG cannot limit relevance to only allegations it raised in its pleading, as this is not the test for relevance. The City is entitled to all documents causing delays for all pleading allegations, including design, manufacture, procurement, and supply chain issues. Costs arising under the Hydro Ottawa Planning Report were limited to documents supporting current costs claimed, with further exploration deferred to discovery.

Court's ruling and outcome

Justice Perron issued orders on November 12, 2025, compelling RTG to produce the Subcontractor Documents in their entirety, requiring both parties to produce relevant meeting minutes and resolutions pertaining to board and senior management matters, ordering both parties to produce insurance proceeds documentation, and denying or narrowing the scope of miscellaneous items. The City was substantially successful on this discovery motion, securing mandatory production of documents essential to understanding RTG's knowledge, decisions, and actions throughout the project. The Court rejected RTG's burden arguments as unsupported by objective evidence and emphasized that proportionality is not a tool to reduce production in large cases. No monetary award or costs were granted in this decision, as neither party filed a costs outline as required by procedural rules. The actual merits of the City's $130 million claim and RTG's $200 million counterclaim remain to be determined at trial, with examinations for discovery to conclude by June 30, 2026.